In Sydney’s competitive real estate market, home buyers, often faced with lack of choice, are increasingly turning their attention to finding “off-market” properties. These properties, which are not publicly advertised, offer additional opportunities for buyers. But there are also some challenges and traps to avoid. As a property buyer’s agent based in Sydney’s Inner West, we understand the nuances of this niche market and have set out below a comprehensive guide to navigating off-market purchases.
Understanding Off-Market Properties
In our local area, there has been a growing acceptance that “off-market properties” are simply those that are for sale but are not publicly advertised on realestate.com.au or on Domain. On the one hand, this could include a scenario where a vendor is dealing directly with one buyer and no one else was aware that the vendor was even considering selling. At the other extreme, off-market listings now appear to include properties that are actually fully marketed by a selling agent with photos and floorplans sent out to their database of buyers or displayed on the agent’s website. However, the general public will not find these properties on realestate.com.au or on Domain.
This contrasts with on-market properties, which are widely advertised and accessible to the general public. Off-market sales can also be referred to as silent listings or pre-market properties, where the property may be known to a select few but not yet fully marketed. The distinction with pre-market properties being that at some point in time, if the property does not sell, the marketing campaign will be switched from off-market to on-market.
Understanding these categories is crucial. For example, off-market properties are sold by private treaty and not at auction. Therefore, off-market properties are typically shared through private networks, offering buyers a chance to negotiate without the pressure of an auction.
On-market properties are available for all to see, often leading to competitive bidding and higher prices.
Price Guides
The rationale used by a selling agent for setting a price guide usually differs enormously between off-market and on-market properties. This can be very confusing for buyers. Because an off-market property is only offered to a small amount of buyers and not sold at auction, the price guides tend to be a more accurate reflection of the vendors’ price expectations. For example, if you saw an off-market price guide in the Inner West of say, $2.5m, it may be reasonable to assume that $2.5m is actually the vendors’ asking price. In contrast, an auction price guide is usually set at a lower level in order to encourage a maximum number of buyers to compete for the property, thereby pushing up the final selling price. So if you saw an auction price guide in the Inner West of $2.5m, the property might end up selling for $2.75m or even more at a competitive auction.
Advantages of Off-Market Properties for Buyers
Why would a buyer want to find off-market properties? There are several advantages to consider:
- Less competition: Since off-market properties are not publicly advertised, there is less competition from other buyers. This can give you an edge in negotiations and reduce the likelihood of a bidding war.
- Potential for better prices: Vendors who sell off-market may be more motivated to sell, which can result in better prices for buyers.
- Greater choice: If the buyer has exhausted their online searches, finding additional off-market listings will give them greater choice.
- Access to exclusive properties: Some vendors may choose to sell off-market to maintain their privacy or avoid the hassle of public viewings. This can give buyers access to exclusive properties that would not be available otherwise.
- More control over the buying process: When purchasing an off-market property, buyers may have more control over the buying process, including the ability to negotiate directly with the vendor.
Why Vendors Sell Off-Market
So, if there is even a hint of selling for a lower price, why would vendors choose to sell off-market?
- Privacy: Some vendors may prefer to maintain their privacy and avoid the public attention that comes with listing a property on the open market and having a sign board displayed at the front of the property.
- Avoiding the hassle of public viewings: Vendors may not want to deal with the hassle of public viewings, which can be time-consuming and inconvenient including constantly cleaning the property and having it ready for “show”.
- Fear of underpricing: Vendors may be concerned that their property will be underpriced if it is listed on the open market with a lower price guide (see above), and therefore they may prefer to sell off-market to avoid this risk.
- Urgency: Vendors who need to sell quickly may choose to sell off-market to avoid the delays associated with listing a property on the open market.
- Minimising costs: Eliminating or minimising marketing costs may be appealing to the vendor.
- Testing the waters: By gauging interest through private channels, the vendor can assess the market’s response and adjust their strategy accordingly without the pressure of a public listing.
Potential Traps for Buyers
While off-market properties offer numerous benefits, they also come with potential pitfalls:
- Lack of transparency: Since off-market properties are not publicly listed, there may be a lack of transparency around the sale process. Buyers may not have access to the same level of information as they would with an on-market property. In fact, it is for this reason that some lenders are wary of off-market properties and there is therefore a risk that the valuation may not stack up at the purchase price.
- Risk of overpaying: Without the benefit of market feedback, buyers may be at risk of overpaying for an off-market property.
- Potential for hidden defects: Off-market properties may not be subject to the same level of scrutiny as on-market properties, which can increase the risk of hidden defects.
- Difficulty in determining market value: Since off-market properties are not publicly listed, it can be challenging to determine their market value. This can make it difficult for buyers to negotiate a fair price.
How Can a Buyer’s Agent Help?
As a buyer’s agent, we can help you navigate the complex world of off-market properties. We have access to a network of real estate agents and vendors, which can give us early access to off-market properties. We can also provide you with expert advice and guidance throughout the buying process, helping you to avoid potential traps and pitfalls.
In conclusion, off-market properties can offer several advantages for buyers, including less competition, potential for better prices, and access to exclusive properties. However, there are also some potential traps to watch out for, including lack of transparency, risk of overpaying, and potential for hidden defects. By working with a buyer’s agent, you can gain both access to off-market properties and expert guidance throughout the buying process.
If you are considering purchasing an off-market property in Inner West Sydney, we invite you to contact us at Buyer’s Domain. We would be delighted to discuss your options and provide you with our expert advice and guidance throughout the buying process.
As a buyer’s agent, we can help you find the perfect off-market property in Inner West Sydney. Contact us today to learn more.
